In 2000, Kennedy won the Republican nomination for the 2nd district and faced four-term DemocratDavid Minge. He had never run for political office before. In the closest congressional race of that cycle, Kennedy defeated Minge by 155 votes.

In 2002, although Minnesota didn't gain or lose any districts, Kennedy's 2nd district—a monstrous 28-county district stretching from the southwestern corner of the state to the fringes of the Twin Cities—was dismantled. Its territory was split up among four neighboring districts. Kennedy's home outside Watertown was located just inside the reconfigured 6th district, in the northern suburbs of the Twin Cities.

Kennedy initially expected to face the 6th's three-term incumbent Democrat, Bill Luther. However, the new 6th was somewhat more Republican than its predecessor, and Luther opted to move to the reconfigured 2nd District where he lost to John Kline. Instead, Kennedy faced Janet Robert, a lawyer and longtime Democratic activist. In one of the most expensive congressional races in Minnesota history, Kennedy was reelected with 57% of the vote. In 2004, Kennedy faced child safety advocate Patty Wetterling. Kennedy received 54% percent of the popular vote to Wetterling's 46%.

Kennedy ran against DFL candidate and Hennepin County Attorney Amy Klobuchar for the U.S. Senate seat being vacated by DFL Senator Mark Dayton. Also in the race were Independence Party candidate Robert Fitzgerald, Green Party candidate Michael Cavlan, and Constitution Party candidate Ben Powers.

Klobuchar won the election, receiving 58% of the vote to Kennedy's 38%.

Kennedy's record of included partnering with twenty Democrats to lead legislation and having more than half the Democrats in the House co-sponsor bills he introduced. Such bills included authoring the Teacher's for Tomorrow’s Careers Act with New Jersey Democrat Rush Holt,[10] the Fair Care for the Uninsured Act with Illinois Democrat Dan Lipinski,[11][12] Rural Access to Emergency Services Act with North Dakota Democrat Earl Pomeroy,[13] the Clean Alternatives for Energy Independence Act with Democrat Colorado Mark Udall,[14] the Emergency Wetlands Loan Act with California Democrat Mike Thompson,[15] the Child Support Enforcement Act with California Democrat Juanita Millender-McDonald,[16] SLAM Act with Oregon Democrat Darlene Hooley to increase penalties on those who traffic and sell meth to our young people.[17]

In 2008, Kennedy, along with former congressmen Tim Penny and Bill Frenzel, founded the Economic Club of Minnesota (ECOM),[19] a nonpartisan platform for national and international leaders in business, government, and public policy to present their ideas on how Minnesota can better compete in an increasingly globalized economy.

From 2007–10 Kennedy served as the Global Retail Business Development Lead for Accenture, a global management consulting, technology, and outsourcing services firm. In 2010, he formed Chartwell Strategic Advisors LLC. Kennedy's activities through Chartwell include speaking on applying 360° Vision to bridge differences between business and society; the political left and right; the United States and the world.

From 2011–13 Kennedy served as an Executive in Residence at Johns Hopkins University’s Carey Business School in Baltimore, Maryland, teaching MBA courses on Corporate Statesmanship, Global Economic Systems, as well as global immersion courses in Brazil and Turkey.

Since 2012, Kennedy has also been an adjunct faculty member at Koc University in Istanbul, Turkey. Kennedy introduced the concept of "Shapeholders" to the field of business strategy—the political, regulatory, media, and activist actors that shape a firm's opportunities and risks. Kennedy teaches how to effectively engage shapeholders both at home and abroad to profitably advance business strategies while benefiting society.